B&E: And what about IT and telecom? They have been considered particularly ripe for M&A, haven’t they?
GV: With respect to deal making in the IT sector, many companies are sitting on idle cash. There are not too many targets to acquire, and the valuations are also high. Moreover, as the value of the rupee is appreciating, the sector will come under pressure. In telecom, with margins under pressure, one may see consolidation in the domestic sector. Further, there is still some consolidation left in telecom infra space.
B&E: The Vodafone case, the ruling in the case of Aditya Birla Novo and Idea Cellular, changes in the takeover code, new competition bill – do these prove that the government is encouraging M&As? What is your suggestion for potential buyers at this juncture?
GV: The government is doing its bit to plug loopholes in the M&A tax and regulatory regime; the recent Takeover Code amendment and the Competition Act are a case in point. However, any change creates its own set of uncertainties in interpretation and execution, which is what corporate India is presently going through, In the backdrop of the Vodafone and Aditya Birla Nuvo rulings, the mood is that of caution with changing laws. I am confident that in the long run, these changes will pan out right; but in the short term, it’s certainly creating uncertainty. I would say that at this point, acquirers have to be more particular about valuations, withholding issues and the regulatory environment. Further time taken for deal closures should be appropriately factored in as well.
Read more....
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting
IIPM Prof. Arindam Chaudhuri on Internet Hooliganism
Arindam Chaudhuri: We need Hazare's leadership
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
GV: With respect to deal making in the IT sector, many companies are sitting on idle cash. There are not too many targets to acquire, and the valuations are also high. Moreover, as the value of the rupee is appreciating, the sector will come under pressure. In telecom, with margins under pressure, one may see consolidation in the domestic sector. Further, there is still some consolidation left in telecom infra space.
B&E: The Vodafone case, the ruling in the case of Aditya Birla Novo and Idea Cellular, changes in the takeover code, new competition bill – do these prove that the government is encouraging M&As? What is your suggestion for potential buyers at this juncture?
GV: The government is doing its bit to plug loopholes in the M&A tax and regulatory regime; the recent Takeover Code amendment and the Competition Act are a case in point. However, any change creates its own set of uncertainties in interpretation and execution, which is what corporate India is presently going through, In the backdrop of the Vodafone and Aditya Birla Nuvo rulings, the mood is that of caution with changing laws. I am confident that in the long run, these changes will pan out right; but in the short term, it’s certainly creating uncertainty. I would say that at this point, acquirers have to be more particular about valuations, withholding issues and the regulatory environment. Further time taken for deal closures should be appropriately factored in as well.
Read more....
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting
IIPM Prof. Arindam Chaudhuri on Internet Hooliganism
Arindam Chaudhuri: We need Hazare's leadership
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
